A government budget deficit is the situation in which public spending exceeds government revenue over a specified period.
Governments commonly finance a deficit by borrowing, often through the sale of government bonds. The deficit is a flow measured over a period, such as a financial year; government debt is the accumulated stock of past borrowing minus repayments. This distinction is a frequent source of confusion.
A deficit is not automatically a sign of economic failure. Governments may borrow during recessions to support demand, or to fund infrastructure and other long-term projects. However, persistent large deficits can increase interest costs and contribute to rising debt if economic growth does not keep pace. A budget surplus occurs when revenue exceeds spending, while a balanced budget has equal revenue and spending. Analysts may also distinguish the primary balance, which excludes interest payments on existing debt.